IdeaCafe | Five Tips on Finding the Perfect Tax Management Solution for Your Small Business
by Jonathan Barsade
When you’re running a small business, it’s important to keep your focus on satisfying customers and generating profits. Administrative tasks like tax management, while certainly a necessary part of doing business, are time consuming, especially when done manually. That is why it is important to automate and outsource as many of these administrative tasks as possible. Twenty five years ago no HR person would outsource payroll; today few business owners would consider processing payroll and payroll taxes on their own. They use outsource solutions such as ADP; Paychex, Intuit and others. Outsourcing allows the business owner to streamline your workload and allows you to concentrate on what you do best – managing your business and focusing on sales.
If, like millions of small business owners, you sell goods and services over the Internet, it’s important to make sure you comply with local and state tax guidelines nationwide, which can be overwhelming unless you have a good automated system. The question is, which service will work best for you? Here are five tips to help you identify the features you need:
1. Find a comprehensive solution: Make sure you find a solution that can handle multiple tax jurisdictions and update information in real time. Look for a solution that weighs factors such as local tax holidays, and which can differentiate between the taxability and tax rates of different items. Static tax tables simply cannot provide this kind of knowhow. If you find an all-in-one, automated solution, you won’t have to cross-reference information and worry about manual compliance with changing rules.
2. Look for a low maintenance solution: It’s also crucial to find a system that won’t tie you up with constant maintenance. Tax laws change frequently all over the country, these are promoted at least monthly, and when you’re running a busy company, it can be hard to keep up with new developments. You’ll need a system that handles changes and updates automatically – one which does not require you to remember each month to do a manual intervention from your end.
3. Make sure the software is easy to install and integrate: When you select a tax engine, it’s vital to ensure it can easily integrate into your current operation. Look for a system that doesn’t require more than a few hours tops to set up and connect with your online shopping cart. It should be simple enough to install yourself without requiring any significant support from a software expert.
4. Find a solution that files all tax returns for you: As you evaluate your options, make sure your tax software generates and files the returns for you across the board, including sales tax for all state and local jurisdictions. Look for a solution that continuously updates information to capture changes in local laws and automatically files your returns. Just like you would not invest in a payment processing solution that processes payments only in certain states, you do not want a tax solution that is limited in scope. Even if you do not sell to certain states, you do not want to have to change your technology provider in the future as you expand your business and start selling in new states.
5. Ensure that your tax solution partner will back you up: Technology has also made it much easier for taxing authorities to step up the number of notices and assessments they send out to businesses over the past year. When a notice is received, the business has to collect information, provide proof of filing and show evidence of payment to resolve it. Make sure your tax solution partner will do this for you – and will not charge you any extra fee for this service.
The bottom line is that you’ll need to find an affordable, fully automated, single-source solution that addresses all of your tax compliance needs. Since doing business online means you’ll need to comply with a variety of tax jurisdictions that change constantly, it’s best to select a solution that updates data in real time and automates your processes. It’s also important to find a solution that is easy to set up and maintain. And of course, you’ll want a system that not only files your taxes but has your back if a taxing authority questions your filings. There are affordable services on the market now that can streamline and automate tax filing, giving you more time to focus on your business. By following these tips, you can find the right fit for your company.